It’s not that the prediction is wrong or that it’s not backed up by research, it’s that the notion in the headline leaves me saying, “And?” The and is the interesting part and the press release on which the report is based goes into some detail that suggests that the authors are on track and that there’s time to do something about this canary in a coal mine. This para from the PR summarizes the problem,

“The focus is on the obvious game mechanics, such as points, badges and leader boards, rather than the more subtle and more important game design elements, such as balancing competition and collaboration, or defining a meaningful game economy,” Mr. Burke said. “As a result, in many cases, organizations are simply counting points, slapping meaningless badges on activities and creating gamified applications that are simply not engaging for the target audience. Some organizations are already beginning to cast off poorly designed gamified applications.”

Yup, that’s about right and I would say it’s also tres, tres typical for an emerging market. First you get the mechanics right then you work on the substance. I think that by 2014 the twenty percent who survive will have moved on to substance.

You know, that paragraph describes nothing as well as it does the airline industry and its obsession with frequent flier miles. Sadly, those programs have been around a long time and have failed to deliver much real value so that makes me skeptical of the 2014 assertion.

Your whole status in the airline programs is wrapped up in a badge that gives you absolutely meaningless rewards like getting on the plane earlier. But as soon as you spend the miles you’ve built up you lose your status. You are no longer as valuable despite your demonstrated loyalty. It should not be that way.

Airlines are a great example of failure at “defining a meaningful game economy.” If I was an economist looking at frequent flier programs I would conclude that all of the programs are in a recession driven by hoarding. I know too many people who are wrapped up in the idea of making it to the next level of a program as if they were playing PacMan or something.

Few people spend their rewards because it involves losing status. But I bet the airlines like it that way. As long as the points stay on the books, they are an unclaimed liability and some airlines have taken to “rewarding” dormant or semi-dormant accounts with magazine subscriptions to clear those liabilities.

You can’t have it both ways. If your game economy involves a reward beyond the meaningless badges everyone throws around, them there has to be a redemption mechanism that won’t diminish status. One’s status should not be held hostage to redemption. A loyal customer or one with demonstrated expertise is intrinsically valuable and such customers should be exalted and, of course, this goes way beyond frequent flier programs.

I just got a check from Costco rebating me two percent on all of my purchases for the last year. Two points doesn’t sound like a lot but it paid for a heck of a Thanksgiving. I am loyal to Costco but mostly because I get good service and good prices every week.

A few years ago, I gave up on frequent flier points. I used up all of my points flying first class until there were only enough left to get some magazines. Then I switched airlines for better service. Now I have to pay to check my bag and I get on the plane with the rest of the plain old citizens and I don’t mind. I actually found it insulting as an American to have to walk on this carpet but not that one as my miles status fluctuated.

My point is that a sub-par service will only be helped so much by gamification and the rewards have to be meaningful, which is what Gartner is saying. For all the people with a gazillion miles flying religiously on an airline that treats them like dirt, there are some intrepid souls who still shop for deals and quality. So the danger with gamification isn’t that the approach will die off, it’s that vendors might hide behind their games thinking they are doing better than they are, and that’s the beginning of serious business problems.

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Great article, Denis! Gamification really seems to be the hot new toy in business. But you’re right, it’s not a silver bullet and it’s not necessarily easier than traditional approaches. Since it’s design oriented by its very nature, it’s bound to be even more sensitive to poor design than many other strategies. Companies think that a clever approach means a problem solved, which is so often not the case. I think it’s most important first to know who your customers are and what they’re getting out of using your product or service. Only then can you really create an intelligent, meaningful game economy that creates business for you and some value for the customer.
John Paul Narowski, Founder – KarmaCRM